Canadian marijuana firm Cronos spending $300 million to enter US hemp market place

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Cronos Group, a vertically integrated cannabis business primarily based in Ontario, Canada, that has international production and distribution, mentioned Friday it will get 4 operating subsidiaries from Redwood Holding Group for $300 million.

Redwood, which is headquartered in Los Angeles, produces, markets and distributes hemp-derived CBD items, like skin care, bath products and gummies, all through the United States beneath the Lord Jones brand.

The deal is anticipated to close in the third quarter. At that time, Redwood co-founders Robert Rosenheck and Cindy Capobianco will join Ontario-primarily based Cronos Group and continue to lead the Redwood brands with their similar group and operating areas.

“Our purpose is to preserve the integrity of all Rob and Cindy have developed when also understanding from them and leveraging Cronos Group’s sources to capitalize on the substantial demand for skin care and other customer items derived from hemp,” Cronos Group President and CEO Mike Gorenstein mentioned in a statement.

In June, Gorenstein hinted at the chance, saying the business had its sights set on the nascent U.S. hemp sector, with plans to launch CBD items by the finish of the year.

A landmark $1.eight billion investment by North American tobacco giant Altria Group, along with Cronos’ ties to cannabis private equity firm Gotham Green Partners, may be Cronos’ pathway to securing a foothold in the United States, Gorenstein told on-line news network Cheddar.

“Through the Altria partnership, we do have access to more than 200,000 retail shops across the U.S. .… (and) access to networks of farmers that can convert from expanding tobacco to expanding hemp,” Gorenstein mentioned in June.

Cronos Group trades on the Toronto Stock Exchange and the Nasdaq beneath the ticker symbol CRON.

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